Tesla’s recent sales figures have brought the company closer to financial difficulties than it has experienced in several years, according to financial results released on Tuesday. This situation poses a threat to one of Tesla’s major advantages over other electric vehicle (EV) companies.
The electric car manufacturer reported a net income of $409 million on $19.3 billion in revenue, following the delivery of nearly 337,000 EVs in the first quarter of the year. This net income represents a 71% decline compared to the same quarter in the previous year.
This quarter marked the worst for Tesla’s deliveries in over two years and followed the company’s first-ever year-over-year decline in sales. Tesla’s income was bolstered by selling $595 million in zero-emissions tax credits, which prevented the company from posting a loss, as stated in its earnings report.
Despite this, Tesla’s stock rose in after-hours trading, with investors focusing on the company’s plans to initiate production of an affordable EV in June. Additionally, CEO Elon Musk indicated during an earnings call that he would be reducing his involvement with the Department of Government Efficiency to concentrate more on Tesla. Musk did not entirely commit to ending his work with DOGE, suggesting he might continue in some capacity through the remainder of President Donald Trump’s second term.
TechCrunch published a summary of other comments from Musk during Tesla’s earnings call, addressing topics such as tariffs, robotaxis, artificial intelligence, and EVs.
Tesla also advised shareholders about the potential impact of the trade war on its business going forward. The company mentioned that President Trump’s tariffs and shifting political sentiments could significantly affect the demand for its products.
The company indicated that the existing tariffs, predominantly aimed at China, would have a relatively larger impact on its Energy business compared to its automotive sector. Tesla stated it is taking measures to stabilize the business over the medium to long term while also warning investors about the uncertainty of sales growth this year.
Tesla continues to adhere to its ambitious plans for producing more affordable models and maintains that it is on track to start production in the first half of 2025. During the earnings call, Musk specified that production would commence in June.
These forthcoming vehicles will integrate elements of a next-generation platform used for the robotaxi, but will primarily rely on the existing platform that powers the Model Y and Model 3. The company noted in its shareholder letter that the production of these more affordable vehicles would take place on the same manufacturing lines as the current vehicle lineup.
This information contradicts a Reuters report from last week, which suggested that the launch of these new EVs would be delayed by several months.
Tesla’s sales face various challenges. The company’s EV lineup is aging, despite recent updates to its sedans and SUVs, and its latest product, the Cybertruck, has not achieved the expected level of success. Additionally, Musk’s political views and his involvement with the Trump administration have led to a significant backlash against Tesla’s brand.
Concurrently, Musk has shifted the company’s focus to its Robotaxi and Optimus robot projects. He has promised to launch an initial version of the Robotaxi service in Austin by June, with potential expansion to other cities by the end of the year. However, details about the implementation of this service remain sparse.
Musk has yet to demonstrate that Tesla’s vehicles can operate autonomously without human intervention, despite years of promises. Furthermore, an internal analysis at Tesla reportedly indicated that the Robotaxi program would incur losses over an extended period, even if successful.
At this time last year, Tesla was dealing with disappointing financial figures. The company’s profits decreased by 55% to $1.13 billion in the first quarter of 2024 compared to the previous year, attributed to an extended EV price-cutting strategy and several unforeseen challenges.
In an attempt to improve profitability, Tesla continued to face pressure. In the second quarter of 2024, Tesla recorded a profit of $1.5 billion, a decline of 45% from the same period in 2023. These profits were affected by a $622 million restructuring charge. It is notable, however, that these profits were supported by a record $890 million in regulatory credit sales.
This article was initially published at 1:15 pm PT and has since been updated with comments from Elon Musk and other executives during the earnings call.
